Reduction of penal damages under EPF, EPS, and EDLI payable by employer
- June 14, 2024
- Posted by: AscentHR
- Categories: India (All States), Notification
Employers are bound to pay penal damages and interest for delay in payment of contributions beyond the statutory due date. While the prevailing rate of interest is 12% per annum (Section 7Q), the damages rate varied from 5% to 25% (Section 14B) based on the number of months’ delay. Such damages were applicable to:
- Employees’ Provident Funds Scheme, 1952
- Employees’ Pension Scheme, 1995
- Employees’ Deposit-Linked Insurance Scheme, 1976
EPFO has now reduced the rate of damages to 1 percent per month, effective from 14th June 2024, under the 3 schemes mentioned above.
The earlier rates were:
|
Sl No |
Period of default |
Rates of damages (percentage of arrears per annual) |
|
1 |
Less than two months |
Five |
|
2 |
Two months and above but less than four months |
Ten |
|
3 |
Four months and above but less than six months |
Fifteen |
|
4 |
Six months and above |
Twenty-five |
The Ministry of Labour and Employment made these amendments in three schemes, vide three separate gazette notifications dated 14th June 2024.
With the said changes, charges with respect to penal damages have been significantly reduced when compared to previous scheme guidelines. Additionally, such damages are levied from the due date to the date of payment.
It is important to note that there is no change in the interest payable by the employer for delayed remittances. This is currently at 12% per annum.
Please refer to the below notification for more details: